Saturday, June 2, 2012

Reading just now about unemployment, I was inspired to do a rough calculation of REAL unemployment. I say "rough" because the most recent census reports I could find for working age Americans were from 2010. But note that these "working age" numbers are way on the high side. I estimated from ages 18 to 64, but that adds in a lot of people who don’t belong in this group: college students, who would be around 21 or 22 by the time they hit the work force, and a very large number of people who retired at 60. So I think we can assume that this number is actually oversized, at least enough so to account for the unknown increase since 2010. Thus I think we can work with them. If you add up the two groups reported in the working age bracket, 18-44 with a total of 112,183,705, and 45-66, with a total of 61,952,636, you get a total of 174,136,341 working age people.

The end game of global leveraged debt – double-digit percentage point market declines in Europe and Japan and the danger of refinancing debt with longer term debt.

There is a painful realization that shifting debt around like a game of musical chairs has little merit unless real production is achieved as an end result. May was a disappointing month for markets in general. While the S&P 500 certainly fell, markets in Japan and Europe took double-digit declines. The massive amount of leverage and debt is simply being shifted around via Long Term Refinancing Operations (LTROs) in Europe. The market has little faith in this since a day of reckoning is hard to avoid even though large financial institutions seem to think they can shift away risk via fancy algorithms. To the contrary, these formulas have perfected a system that is simply dismantling the US middle class. A financial crisis built on debt is trying to find a solution in higher levels of debt via these same institutions.

Posted 06/01/2012 06:53 PM ET Finance: Governments in the U.S. and Europe are forcing private banks to buy up government debts - debts that may turn sour down the road, decimating banks' balance sheets. This is a recipe for another financial crisis.
It has become an enduring national myth - repeated dutifully by Democratic politicians and their mainstream media lapdogs in recent years - that commercial banks "caused" the financial crisis.
They didn't.
Even so, banks are still demonized for it. Because of this, they're now being forced to buy the bad debts of our out-of-control federal government.